Wealth ManagementRisk Insurance

How health and wellbeing factor into your retirement planning

Matthew Swieconek
5 November 2023
6 min read

The relationship between health and wealth is closely intertwined. If you’re unwell and struggle to work, accumulating enough wealth to navigate the twists and turns of daily life may be a challenge. And, vice versa: if you don’t have financial security, this could impact your health and wellbeing by increasing stress levels and worry.

Nearly 80% of older Australians (65 years and older) have at least one chronic health condition, with approximately 28% living with three or more conditions. When planning for your golden years of retirement, robust health and wellbeing should take centre stage. Otherwise, what happens when you retire and the unexpected happens? Failing to account for health and wellbeing when preparing for retirement might leave you vulnerable.

This article explores what adequate retirement planning looks like from a health and wellbeing perspective. From health insurance coverage to setting aside funds for medical emergencies, we’ll go into ways you can safeguard your financial wellness during retirement.

Financial wellbeing and why it’s important

Financial wellbeing means having enough money set aside to meet your needs now and in the future so you can live the life you want. According to ANZ, good financial wellness is monitoring your spending and savings habits, paying off debts and setting a budget that you can stick to.

When it comes to financial wellbeing in retirement, there are a few things you can do now to preserve wealth for future you.

  1. Create an emergency savings account. If you haven’t got one already, today is a good day to start setting aside some money for the unexpected.

  2. Set a budget for your retirement. Working out what you might spend throughout retirement is a good way to get a clear picture about what money you’ll need for the future.

  3. Prioritise health. While there are many things about your health you can’t control, there’s plenty you could be doing to reduce any health risks.

  4. Protect your assets. Right now, your ability to earn an income is one of your biggest assets. Is yours protected against illnesses or injuries? Having a personal insurance strategy can mitigates the financial risk to you and your family if you’re unable to earn income on a short or long-term basis.

Including health and wellbeing in your retirement planning

Including health and wellbeing in your retirement planning

When it comes to health, here are some of the most common factors many people overlook when planning for retirement.

How to budget for your healthcare expenses

When exploring how health and wellbeing tie into financial planning for retirement, the first step is to estimate how much you will likely spend on healthcare. As we age, our immune system generally weakens, making us more vulnerable to infections of all kinds. With studies showing four in five Australians aged 65 years live with at least one chronic condition, it is vital that you be as pragmatic as possible when calculating estimated future medical care expenses.

In a nutshell, healthcare expenses tend to be significant in retirement. By estimating these costs sooner rather than later, you may find you’re more financially prepared and have sufficient funds to cover potential medical bills, avoiding unexpected financial burdens.

Here are some of the factors to consider when budgeting for your healthcare expenses:

  • Your expected retirement age and life expectancy

  • Your current and future health status and needs

  • Your Medicare eligibility and coverage

  • Your private health insurance premiums and benefits

  • Your out-of-pocket costs for medications, treatments, or services

Here are a few tips and tools to help you budget for your healthcare expenses:

  • Online calculators: Online calculators are invaluable tools that can help you accurately estimate the cost of your future healthcare.

  • Guides: For more in-depth information, consider looking into guides that cover various healthcare services, procedures, and treatments, along with their associated costs.

  • Checklists: Checklists are great tools to help you stay on track and can help ensure all potential healthcare expenses are considered during the budget-making process.

  • Apps: Budgeting apps such as Buddy, YNAB, and Goodbudget can analyse your healthcare expenses over time and help you create a realistic budget for future medical costs.

How to manage your health risks

Your potential health risks will likely inform the type of insurance coverage you will need in the future. As mentioned earlier, the likelihood of facing serious medical issues increases as you age, and understanding potential health risks allows you to plan and budget for related healthcare costs, including insurance premiums, treatments, and long-term care expenses.

Some of the factors that can help you assess your health risks and ensure you have adequate insurance coverage include:

  • Your family history and genetic predisposition

  • Your lifestyle habits and behaviours

  • Your preventive care and screening tests

  • Your risk management and mitigation strategies

  • Your insurance options and requirements

Here are a few tips to help you manage your health risks and reduce your insurance premiums:

  • Schedule regular checkups: undergoing regular checkups ensures early detection of various health issues. This ultimately translates to better health outcomes and reduced future medical expenses and insurance premiums.

  • Leverage online health risk assessment tools: with new technologies, you can now access a range of health risk assessment tools from anywhere in the world. Tools like SafetyCulture, Aptien, and Risk Cloud help analyse your lifestyle, family history, and health risks and recommend preventive measures.

  • Maintain a healthy lifestyle: combining an active lifestyle, a balanced diet, and productive sleeping habits can reduce the risk of developing chronic conditions and improve overall well-being.

  • Use insurance comparison sites: when shopping for a health insurer, use comparison websites to compare different plans, coverage, and costs. This can be an effective way to find the ideal insurance policy that suits your retirement needs and budget.

Key takeaway

Retirement planning key takeaways

Aging is an inevitable part of human life, but it doesn't have to be stressful. Seeking retirement planning advice may be beneficial as financial advisers can help you take steps to manage or mitigate identifying potential health risks, as well as help you estimate the appropriate costs of your medical care and associated expenses.

Our experienced retirement financial planners work closely with you to create a financial plan and investment strategy that is tailored to your needs and goals. Contact our wealth management today to schedule a complimentary consultation.

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Author: Matthew Swieconek | Head of Investment Relations